Justia Mergers & Acquisitions Opinion Summaries

In 2004, KKR & Co. LP (KKR) acquired KKR Financial Holdings LLC (KFN) in a stock-for-stock merger. Plaintiffs, stockholders of KFN, challenged the merger by filing a class action complaint, asserting breach of fiduciary duty claims against the members of the KFN board and KKR. The Court of Chancery dismissed the action for failure to state a claim for relief, holding (1) Plaintiffs’ fiduciary duty claim against KKR premised on the theory that KKR was a controlling stockholder of KFN failed, as KKR did not control the board of KFN when it approved the merger; and (2) Plaintiffs’ fiduciary duty claim against the directors of KFN failed because the board’s approval of the merger was subject to business judgment review. View "In re KKR Fin. Holdings LLC Shareholder Litig." on Justia Law

A class of stockholders of Rural/Metro Corporation (Rural) filed a class action against RBC Capital Markets, LLC (RBC) for aiding and abetting breaches of fiduciary duty by the board of directors of Rural in relation to a merger between Rural and Warburg Pincus, LLC. The post-trial decision held RBC liable to Plaintiffs but did not fix an amount of damages suffered by the class. This opinion quantified the amount of damages for which RBC was liable, setting the amount of RBC’s liability to the class at $75,798,550, which represented eighty-three percent of the total damages. The court also awarded pre- and post-judgment interest at the legal rate from June 30, 2011, until the date of payment. View "In re Rural/Metro Corp. Stockholders Litig." on Justia Law

First Citizens BancShares, Inc. (FC North), a bank holding company incorporated in Delaware and headquartered in Raleigh, North Carolina, adopted by forum selection bylaw (the “Forum Selection Bylaw”) the same day it announced it had entered into a merger agreement to acquire First Citizens Bancorporation, Inc. The Forum Selection Bylaw selected as the forum the federal or state courts of North Carolina instead of the state or federal courts of Delaware. The City of Providence filed complaints challenging as invalid the Forum Selection Bylaw and asserting various claims against the FC North board of directors concerning the proposed merger. The Court of Chancery granted Defendants’ motions to dismiss both complaints for failure to state a claim, holding (1) the Forum Selection Bylaw is facially valid; and (2) it is not unreasonable, unjust, or inequitable to enforce the Forum Selection Bylaw in this case. View "City of Providence v. First Citizens Bancshares, Inc." on Justia Law

Plaintiffs, holders of PHC, Inc. stock, filed separate but similar class actions suits in Massachusetts, alleging that an announced merger between PHC and Acadia Healthcare Company, Inc. was the result of an unfair process that provided them with too little compensation. A federal district court consolidated the two cases and, after the merger was consummated, granted summary judgment for Defendants, concluding that Plaintiffs were unable to demonstrate that they suffered an actual injury. The First Circuit vacated the judgment of the district court, holding that the court abused its discretion by not allowing discovery before ruling on the motion for summary judgment. Remanded. View "MAZ Partners LP v. PHC, Inc." on Justia Law

A pension fund and other America Online (AOL) shareholders brought a class action against Credit Suisse First Boston (CSFB), former CSFB analysts, and other related defendants (collectively, Defendants), alleging violations of sections 10(b) and 20(a) of the Securities Exchange Act and of SEC Rule 10b-5. Specifically, Plaintiffs claimed (1) CSFB made material misstatements and fraudulently withheld relevant information from the market in its reporting on the AOL-Time Warner merger; and (2) the shareholders purchased stock in the new company at artificially inflated prices as a result of the alleged misstatements and omissions. The district court awarded summary judgment to Defendants. The First Circuit Court of Appeals affirmed, holding (1) the district court did not err in excluding the shareholders’ expert testimony for lack of reliability; and (2) without the expert’s testimony, Plaintiffs were unable to establish loss causation. View "Bricklayers & Trowel Trades Int’l Pension Fund v. Credit Suisse Secs. (USA) LLC" on Justia Law

Plaintiff, CHW, was the surviving entity after a merger between Marian and the hospitals previously constituting CHW. Plaintiff's claim related to depreciation taken by Marian in the years before the merger. Plaintiff argued that the merger transaction revealed the inadequacy of that depreciation and that, under the statute and regulations applicable to the merger, the deficiency was subject to recoupment as part of Medicare providers' general entitlement to compensation for the "reasonable cost" of services rendered, 42 U.S.C. 1395f(b)(1). The Secretary rejected the claim, reasoning that the implicit selling price showed a transfer for much less than Marian's true worth, so that the merger did not present a "bona fide sale" between "unrelated parties," a prerequisite for use of the transaction as evidence that the prior depreciation had been inadequate. The court concluded that, under the valuation methods permitted prior to the Program Memorandum at issue and in fact championed by plaintiff here and in the administrative proceedings, there was a gross disparity between Marian's value and the implicit price paid. Therefore, the court affirmed the district court's judgment affirming the Secretary. View "Catholic Healthcare West v. Sebelius" on Justia Law

After Occam Networks, Inc. merged with Calix, Inc., Plaintiffs filed an action contending that Defendants, Occam directors and others, breached their fiduciary duties by making decisions during Occam’s sale process that fell outside the range of reasonableness and by issuing a proxy statement for Occam’s stockholder vote on the merger that contained materially misleading disclosures and material omissions. Defendants moved for summary judgment. The Court of Chancery (1) granted the director defendants’ motion for summary judgment, holding that a provision in Occam’s certificate of incorporation exculpated them from liability; and (2) denied summary judgment as to the disclosure claims because genuine issues of material fact existed as to these claims. View "Chen v. Anderson" on Justia Law

Since 2007, Dimensional Associates, LLC, a private equity fund, had controlled Orchard Enterprises, Inc., a Delaware corporation. In 2010, Dimensional squeezed out the minority stockholders of Orchard. The merger consideration was $2.05 per share, but in 2012, the then-Chancellor determined that the fair value of the common stock at the time of the merger was $4.76 per share. Plaintiffs subsequently filed this breach of fiduciary action, contending that Dimensional and the directors who approved the merger should be held liable for damages. Plaintiffs also named Orchard as a defendant. Plaintiffs and Defendants filed cross motions for summary judgment. The Court of Chancery (1) denied Plaintiffs’ motion except in two respects: one of Plaintiffs’ claimed violations of Defendants' duty of disclosure was a material misrepresentation, and entire fairness was the operative standard of review with the burden of persuasion on Defendants; and (2) denied Defendants’ motions except in two respects: one of the alleged disclosure violations was factually accurate, and Orchard could not be held liable for breach of fiduciary duty or for aiding and abetting. View "In Re Orchard Enters., Inc. Stockholder Litig." on Justia Law

Plaintiffs in this case were former shareholders of McMoRan Exploration Company (MMR). Plaintiffs challenged MMR’s acquisition by Freeport-McMoRan Copper & Gold, Inc. The case settled, and the only remaining issue was an award to Plaintiff of their attorneys’ fees and expenses upon the Court of Chancery’s discretion. After a consideration of numerous factors, the most important of which was the benefits achieved by Plaintiffs for the shareholder class, the Court of Chancery concluded that the appropriate award of fees and expenses for the efforts of Plaintiffs’ attorneys was $2.4 million. View "In re McMoRan Exploration Co. Stockholder Litig." on Justia Law

Petitioner and Ajmal Khan, principal of Verus Investment Holdings, purchased securities in a company to arbitrage a merger between that company and another company (the trade). Petitioner and Khal used Verus' account at Jefferies & Co. and Winton Capital Holding to complete the purchase. After the merger, Jefferies wired to Verus the original investment and profits attributable to the Winton funds. Verus wired the investment money to Winton and the profits to Doris Lindbergh, a friend of Petitioner. Tax authorities later informed Jefferies it owed withholding tax on the trade. Pursuant to an arbitration clause in an agreement between Jefferies and Verus, Jefferies commenced an arbitration against Verus for the unpaid taxes. Verus, in turn, asserted thirty-party arbitration claims against Petitioner, Lindbergh, and others for their share of the taxes. After a hearing, Supreme Court determined that nonsignatories Petitioner and Lindbergh could not be compelled to arbitrate. The Appellate Division reversed, concluding that Petitioner should be estopped from avoiding arbitration because he knowingly exploited and received direct benefits from the agreement between Jefferies and Verus. The Court of Appeals reversed, holding that Petitioner did not receive a direct benefit from the arbitration agreement and could not be compelled to arbitrate. View "Belzberg v. Verus Invs. Holdings Inc." on Justia Law